A bill to authorise the Reserve Bank of India (RBI) to direct banking companies to resolve the problem of stressed assets was introduced in Lok Sabha, the lower house of Parliament, by Finance Minister Arun Jaitley.
The Banking Regulation (Amendment) Bill, 2017 seeks to amend the Banking Regulation Act, 1949 and replace the Banking Regulation (Amendment) Ordinance, 2017, which was promulgated in May this year. The measure allows the RBI to initiate insolvency resolution process on specific stressed assets.
The RBI would also be empowered to issue other directions for resolution, appoint or approve for appointment, authorities or committees to advise the banking companies for stressed asset resolution.
The RBI had in June identified 12 large loan defaulters who account for 25 per cent of the total bad loans in the banking sector.
Action under the Insolvency and Bankruptcy Code has already begun in certain cases, including Essar Steel, Bhushan Steel and Bhushan Power & Steel.